Cha Partners Makes Public Shareholder Proposal Against Tobis Co., Ltd.

[Asia Economy Reporter Park Soyeon] Cha Partners Asset Management Co., Ltd. (hereinafter Cha Partners) has taken action to exercise shareholder rights ahead of the regular general meeting of shareholders of Tobis Co., Ltd. Cha Partners is a collective investment business operator holding a 3.6% stake in Tobis through the funds it manages.

On the 7th, Cha Partners announced that it submitted a shareholder proposal on the 11th of last month to include agenda items for Tobis's regular general meeting of shareholders and plans to engage in a vote battle at the Tobis regular general meeting scheduled for the 21st of this month.

On this day, Cha Partners publicly proposed measures to enhance shareholder value through governance improvements targeting Tobis.

The contents of Cha Partners' shareholder proposal include a cash dividend of 500 KRW per share to enhance shareholder value, reduction of the director remuneration limit, abolition of golden parachute clauses, and the appointment of an independent auditor (candidate Shim Hyesub) to prevent managerial entrenchment by the management.

Additionally, Cha Partners proposed actively discussing various measures to align the interests of management and shareholders, such as granting stock options to management, enabling them to share in future growth together.

Cha Partners recommended that Tobis cancel all treasury shares it holds (7.50% of the total issued shares). If Tobis cancels its treasury shares, not only will the interests of minority shareholders be protected, but the shareholding ratio of Tobis's largest shareholder and related parties will also increase from 14.43% to 15.60%.

Cha Partners claimed that there are five suspicious circumstances suggesting that managerial entrenchment and breaches of directors' duty of loyalty, caused by principal-agent problems between management and shareholders?the core causes of corporate governance issues at Tobis?have been occurring over a long period.

▲ Excessive management compensation compared to shareholder returns and competitors ▲ Discounted sale of treasury shares to third parties ▲ Management establishing another company (Hoyatech), growing it through transactions with Tobis, then merging it with Tobis: management realizing gains by selling Tobis shares received as merger consideration ▲ Management realizing gains by selling new share subscription warrants during the stock price surge period following the Hoyatech merger announcement ▲ Golden parachute clauses and other anti-takeover provisions in the articles of incorporation.

Cha Partners emphasized that the fundamental solution to the misalignment of interests between management and shareholders and managerial entrenchment is to establish governance that aligns the interests of management and shareholders, and accordingly, it submitted the shareholder proposal to include agenda items for this regular general meeting of shareholders.

Cha Partners stated, "The cancellation of treasury shares will align the interests of major shareholders, management, and all shareholders, and will serve as the starting point for establishing governance where both management and shareholders can win in the long term."

This content was produced with the assistance of AI translation services.